|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Insurers Continue to Prowl for Provider Assets
Last week it was reported that UnitedHealth Group was interested in acquiring the former AmSurg chain of ambulatory surgery centers from Envision Healthcare. The deal, which would presumably have added another large piece to the fast-growing OptumCare division of UnitedHealth, would have come on the heels of last year’s acquisition of Surgical Care Affiliates by Optum. But it emerged this week that Optum is out of the running for the deal after Envision sued UnitedHealth on Monday in a dispute over network exclusion and provider pricing.
Optum is not alone in this strategy. Humana recently moved to organize their owned clinics and physician assets under a new brand, Conviva. We’d expect Optum/UnitedHealth and Humana to remain on the hunt for assets in the ambulatory surgery, urgent care and physician practice space. Large insurers are centering on a common strategy: invest heavily in the front end of the delivery system, create a separate consumer brand for care delivery, and attempt to control referrals and pricing for hospital and specialty care—and reap the gains on the insurance side of the business.
Why We Were All Duped by Theranos
In light of the SEC filing accusing Theranos founder Elizabeth Holmes of “massive fraud,” it’s critical to consider why our industry, which strives for evidence-based care, was so willing to anoint Holmes as revolutionary with little supporting evidence that her product worked. We all talk a lot about disruptive innovation these days—it’s become an industry obsession. Theranos’s low-cost, painless lab technology seemed poised to fuel the growth of consumer-driven retail care. But in the end, it was vaporware.
Large health systems taking on the role of VC incubators are taking on the risk of endorsing unproven technologies in hopes of big returns. We’re all susceptible to the mythology of the “tech wunderkind”, and with her black turtleneck, Holmes was widely hailed as “the next Steve Jobs.” But the Theranos debacle is a reminder that Silicon Valley’s “fake it till you make it culture” may not always be the best fit for healthcare, and providers should have a high bar for any technology that purports to “revolutionize” patient care. There’s a good reason medicine is an inherently conservative discipline.
California Moves on From Single Payer—For Now
The California Assembly declined to advance a prominent bill that would have established a single-payer healthcare system. The proposed California system was estimated to cost $400 billion annually, likely requiring massive new payroll taxes to cover the increased spend. California’s proposal hit the same wall that all single-payer flirtations in the US have—despite popular and political support, there’s zero consensus on how to pay for it. As we approach the midterm elections, we expect calls for single-payer healthcare to gain momentum. But it’s highly unlikely that Congress will ever be willing to make the budget tradeoffs necessary for single payer to be anything more than a political rallying cry.